Is Enbridge a Good Pick for Dividend Seekers?
The wide-moat firm has one of the most attractive dividends in the Canadian energy sector.
Joe Gemino: Best idea and wide-moat Enbridge has one of the most attractive dividends in the Canadian energy sector. The stock currently has a handsome yield of 6%, which sits above the subsector’s average. We expect Enbridge to increase its dividend by 10% in 2020, but only modest annual increases of 3% thereafter.
In our view, the dividend looks stable, and Enbridge maintains a healthy coverage ratio of 1.5x the cash dividend, which is also above the subsector’s average. The dividend is derived from the company’s contracted pipeline and regulated utilities businesses. Most of the company’s pipelines have long-term contracts in excess of 10 years, which further adds to our conviction of the dividend’s stability.